Organisation – Business Management Ethics and Entrepreneurship Notes

Organisation as comprising human relationship in group activity:
“Organisation structure is the pattern of relationships among the component parts of the organisation.”

kast and Rosenzweig:
1. Concept of Organisation:

Organisation can be defined as collection of people and coordination of their activities to achieve the objectives of the enterprise.
In format sense, it is referred as collectivity of people and inoperative sense, it is referred as division of work.

Steps in Organising:

Identification and classification of activities consistent with organisational objectives
Formation of workable units or departments.
Delegation of authority and placing of responsibility to the executives.
Establishment of superior-subordinate relationships.
Provision for effective coordination and establishment of definite line of supervision.

Features of Organisation:

It is a sub-process of management.
It is goal-oriented.
It deals with group efforts.
It is based on the principle of division of work.
It establishes authority-responsibility relationships.

Organisation structure is defined as:

Set of formal tasks assigned to individuals and departments.
formal reporting relationships includes line of authority, decision responsibility, number of hierarchical levels and span of manager’s control.
Design of systems to ensure effective coordination.

Importance of Organisation:

The goal of organisation are attained through mutual contribution.
Effectiveness and efficiency helps in providing continuity and success to business firms.

1. FacilItates Administration: It helps in effectively achieving the functions of planning, directing, coordination and controlling.

2. FacilItates Growth and Diversification:

Organisation helps in developing the enterprise by taking it to greater heights.
This growth is facilitated by division of work and proper delegation of authority.

3. Perm Its Optimum Use of Resources:

It facilitates optimum use of human resources through specialisation.
This means that the people in the enterprise are effectively trained.

4. Stimulate Creativity: Organisation helps the managers In focusing on the areas which are more important so that their talent can be exploited to the maximum.

5. Transfer and Adaptation of Technology: Any enterprise must always accept and adapt itself with the latest technology available in the market and also import these technologies to the society through its members.

6. Encourages synergy effect:

It is the effect which enhances the performance of a team when one efficient member motivates other normal members to work more efficiently.
It can be done through proper selection, training remuneration for employees.

Process of Organisation:
1. Determination of Objectives:

It is necessary tor the management to clearly define the objectives before taking up any activity.
Since the objectives provide a strategy to the management, they will help in giving unity of direction in the organisation.
They will get unity of direction in the organisation.

2. IdentIfication and coupling of Activities:

Each job should be properly classified and grouped.
In case of a bigger group, all the jobs must be assigned clearly to the employees with a well-defined authority and responsibility.
This will help in reducing the duplication of work.

3. Allotment of Duties:
After the duties and tasks have been defined, they should be clearly allotted to the members, depending upon their ability and made responsible for that.

4. Developing Relationships:

Accountability and authority of one person over the other should be explicitly defined.
n individual should be given sufficient authority to do the job assigned to him.
This will facilitate the smooth functioning by facilitating delegation of responsibility and authority.

5. Integration of Activities:
(a) This can be achieved:

Through authority relationships horizontally/vertically.
Through an effective communication system.

Authority, Responsibility and Accountability:
Authority:

It is the right of the managers to command the subordinates, issue them orders and Instructions.
Fayol defined authority as the right to give orders and exact obedience.
Mooney described authority as “the supreme co-ordinating power”.
Authority to command exact obedience is known as the official authority or authority of position.
A manager can have the ability to ¡ntuence behaviour of the people and this is known as personal authority.

Responsibility:

It is the obligation to perform a task. Thus its basic essence is obligation.
A manager has the authority to get things done from his subordinates, so authority flows downwards whereas responsibility flows upwards.

Accountability:

It means answerability for the accomplishment of the task assigned by the superior.
The process of delegation is completed only after the employee is able to answer all the questions put up before him.
Authority goes down and down in the line making everyone accountable for the duty assigned. Authority, Responsibility and Accountability should be equal to each other. If anyone of them is out of balance, problems can arise.

Authority, Power, Continuum:

Authority and power are not the same.
Authority mean right to command, whereas power is the capacity to influence the behaviour of others.

Delegatlon of Authority: .

Delegation means the process of getting work done by others by giving them responsibility.
Delegation of authority entails division of workload and sharing responsibility.
A manager is not judged by the work he performs but by the amount of work he gets done through others.
Degree of delegation depends upon manager’s degree of management capabilities.

Process of Delegation
1. AllocatIon of Duties: This is the most important task under delegation, before the authority is delegated the duties corresponding to that must also be allocated.

2. Delegation of AuthorIty: Delegation is the process a manager follows in dividing the work assigned him so that he performs that part which only he, because of his unique organisational placement, can perform effectively and so that he can get others to help him with what remains. L. A. Allen.

3. AssIgnment of ResponsIbility: When authority is delegated, I.e. when one is given the rights, the employee must also be assigned a corresponding “obligation to perform. Operating responsibility can only be delegated.

4. Creation of Accountability: To complete the delegation process, employees must also be assigned accountability. Duties, authority and obligation are three most important ingredients of delegation.

Principles of Delegation
1. Clarity of Delegation:

The employee must be given a very clear idea of the task assigned, the functions to perform and authority given to perform the task.
Ambiguity in delegation often results in poor outcomes.
Every subordinate must know what positions exist in the organisation structure and how his own position fits in the overall managerial hierarchy.
Delegation of authority should not be rigid, ¡t should modify with the change in work.

2. Responsibility cannot be delegated:

A manager when delegates the work to his subordinates, does not mean that he shall not be held responsible for that tàsk.
Thus, when authority Is delegated, obligations are not passed down the organisation, rather new responsibilities are created at each level.

3. Delegation to be consistent with result expected:

A manager should know jobs & results expected of delegation and should delegate only that much authority which is just to accomplish the results.
This principle is based on assumption that goals are set & plans made in advance, jobs are set up to accomplish them.
Helps minimising dangers of delegation.

4. Parity of Authority and ResponsIbility:

An employee can be held accountable for the tasks assigned to him and for this purpose the authority is delegated to him.
Since both authority and responsibility relate to the same task, it would be correct to say that they are co-extensive.
Duties are concerned with objectives and activities, obligation with attitude and authority Is related to rights. Delegation to be consistent with results expected.

5. ExceptIon Principle:

The manager delegates the authority to the subordinate in order to be able to focus on other important task and to push down the process of decision making as close to the source of information as possible.
The exception being that when the junior Is not able to make a decision then he should refer them upwards for consideration by the senior.
The pooling together of the authority of two or more managers before a problem caribe solved, a decision be made is described as splintered authority.

6. PrincIple of Functional Definition:

All the activities and tasks that are assigned to an individual must have dear definition of authority, duties, power and responsibility.
Only then will the employee be able to effectively achieve the target.

7. Scalar Principle:
There should be a dear line of authority from top to the lower level of management.

8. PrincIple of Unity of Command:

Delegation can be effective only when a subordinate receives orders from one senior only.
This avoids problems of confusion, preferences and divided loyalty.

Barriers to Delegation:

Fear of loss of power
Certain personal attitudes
Lack of ability to direct.

Span of management: The number of subordinates that a superior can effectively supervise is known as ‘span of management’ or ‘Span of control.’

5. Centralisation and Decentralisation:

Centralisation means a large part of decision making and authority is withheld at higher positions in the management hierarchy.
Whereas, decentralisation refers to a situation where a larger part of authority Is delegated down to the junior level so that a decision can be quickly taken.
But decentralisation does not mean delegation of authority. The difference being that decentralisation is a situation produced by larger delegation of authority while delegation is a process.
The organisation can sustain without decentralisation but not without delegation.

Advantages of CentraIistIon:

Uniformity of policy and procedures can be strictly enforced.
Eliminates duplicate or overlapping activities.
Enables fuller utilisation of employees skills and talent.
Ensures consistency of operation and thus helps in retaining substantial control over the activities of the enterprise.

Advantages of Decentralisation:

It improves the quality of decisions by pushing decision making closer to those who are affected by the decision.
It facilitates efficiency of managers, as the managers know what they have to do. Thus good managers are encouraged to perform better and weak managers are counselled and reprimanded.
Managers and employees at all the levels can actually see the result of their own work and actions and thus their morale is boosted.
It provides actual work experience, thus, create a reservoir of promotable managerial manpower.
Improved morale of personnel.
Decentralisation of management is yet another advantage of decentralisation.

Factors determining degree of Decentralisation:
1. Importance and Significance of the Decision:

All the decisions that are of importance are normally not delegated and the authority is retained at higher levels of management only.
Thus, it can be observed that determining factor is the responsibility allocation along the managerial hierarchy.

2. Size of the Enterprise:

The more are number of departments the more difficult it is to take decisions.
Thus, it is suggested that the size of the enterprise should be such that units can be managed with ease.

3. Management Attitude and Philosophy:
Executives with rigid outlooks do not delegate much authority, on the other hand, executives with a lenient approach involve the employees In the decision making.

4. Control Techniques:
Management desirous of obtaining a strict policy with regards to price, product, service etc. will try retaining control in their own hands.

5. AvailabilIty of Capable Executives:

It is very obvious that executives delegating authority would want that they do so only to an educated and experienced staff.
This feature of decentralisation requires training of the employees.

6. Environment Influences:
The more the decisions are under environmental influence the lesser should be their delegation.
(a) Some examples of this are government policies, trade unions, etc.

Differences between Delegation and Decentrallsatlons:

Points/Basis	Delegation	Decentralisation
1. Nature	It Involves superiors and subordinates.	It involves delegation from top-level to the lowest level of management.
2. Control	It remains with the superior.	It is passed on to the lower levels.
3. Need	It Is Essential to get things done.	It is optional. Management may or may not delegate authority.
4. Responsibility	It remains with the delegator. He will remain answerable for the job.	Head of department is responsible for all the activities under him. Thus it is fixed at each department.
5. Relationship	Delegation creates superior-subordinate relationships.	Decentralisation is a step towards formation of semi-autonomous units.

According to Allen, decentralisation is systematic effort to delegate to the lower levels all authority except that which caribe exercised at central point.

Departmentalisation: ‘Departation’ or ‘Deparimentalisation’ is the process of grouping the activities of an enterprise into several units for the purpose of administration at all levels.

7. Type of Organisation Structure:

Formal Structure
Informal Structure

1.Formal Structure:
Refers to the structure of jobs and positions with defined functions and relationships built by management to realize the objective.

Formal structure comprises of the following:
(i) Line Organisation:

it is the oldest and the simplest form of organization called as military organization or scalar type of organisation.
Under these, the managers have the direct responsibility of accomplishing any task.
Also known as scalar organisation, in this, the superior has direct control over the subordinate. it is also called as military organisation.
Chief executive leads the organisation.

(e) Benefits:

It is economical, effective and simple to work.
Promotes unity of command conforms scalar principal.
Fixes responsibility in a definite manner.
Less expensive due to non-inducement of staff personnel.
It is stable.
Rapid decisions are taken.
Excellent discipline due to unified control.
Effective co-ofdination.
Promotes unity of command.

(f) Weaknesses:

Suffers from lack of specialisation.
There may be occasions when a line manager Is not competent to take decisions. Lack of expert staff advice.
It is rigid and inflexible since its based on autocratic system of management.
It lacks expert staff advice.
The work may be allotted on the basis of choice of superior rather than according to any plan.
It is based upon autocratic system of management.
Key men being loaded to the breaking point.
It cramps progress and prevents effective working of the unit.
Encourage nepotism.
Dictatorial or arbitrary power leads to considerable damage.

(g) Suitability:

Where the scale of business is small.
In continuous process industries.
Work is of routine nature.
Machinery is nearly automatic.
Labour management problems are not difficult to solve.

(ii) Functional OrganisatIon:
(a) All the similar type of work s grouped in one department which is under one senior.
(b) This means better utilisation of employees and development of their skills.
(c) Scope of work is limited but area of authority is unlimited.
(d) It ensures division of labour and specialization based on individual proficiency and knowledge.

(e) Disadvantages:

It requires high degree of specialization and hence difficult to establish.
AuthorIty and responsibility often overlap
With the change in the personnel, performance is also affected that may lead to instability.
Specialists ignore the big picture due to which deficiency of leadership is felt for a long time.
One man control underlines organisation largely alleviated here.
Locating and fixing up responsibility becomes difficult.
Control and coordination becomes difficult to achieve as specialists often operate with considerable independence so that organisation seldom functions as a total system.

(iii) Line and Staff Organisation:
(a) The staff managers assign the duties to the line so that the staff managers get time for more important tasks which are not routine in nature. Line is supplemented by staff. Clear demarcation between thinking & doing; staff being the ‘thinkers’ and line being the doers.

(b) Advantages:

Organisation is more stable and flexible.
CombInes the best of both the line and staff managers.
Better utilisation of human resources.
Financial specialists provide advice to management on various matters.
Stability and discipline of line organisation are preserved; only the specialist is added.

Line and staff relationships may result in jealousy.
Line managers loose their judgement and Initiative by depending too much on staff.
Staff members do not get much authority to perform the task effectively.

(d) Staff act as the ‘thinkers” and line as the ‘doer.

The problem of choice:
It is concerned with determining the right balance of the organising structure / among the three. – The line structure ês characterised by total absence of staff specialists, though it is a part of every organisation. Functional organisation involve too much of specialisation. The line and staff organisation lies in between the line structure and functional organisation.

(iv) Project Management Organisation:
It sets up within an existing organisation.

(a) such organisation is directed by a project manager responsible for project goals.

(b) Under this type of organisation, a manager is selected from the organisation itself and assigned the responsibility of completing a well-defined project.

(d) Manager’s authority is functional within limits of project and the organisation dissolves after project work is completed.

(e) Advantages:

It has an independent status. WhIch cuts horizontally the organisation structure.
Flow of information is lateral and not vertical. Thus, it has strong horizontal working relationships.

(v) Matrix Organisation:
(a) It combines functional departments with project organisation.

(b) The functional department constitute vertical chains of command while project organisation form horizontal chain of command.

(c) Project wise, the organisation is divided into various functional departments, which form the vertical chain of command and the project organisation or product decisions form the horizontal chain of command.

(d) The task force consists of a group of individuals, drawn from various functional departments.

(e) Advantages:
Promotes specialisation as well as lateral coordination.

(f) Limitations:

The number of vertical and horizontal relationships hamper the organisational efficiency.
Disagreement between project team and functional department.
Difficulty for functional heads to appraise employee performance.

2. Informal Structure:
Barnard viewed informed organisation as joint personal activity without conscious joint purpose, even though possibly contributing to joint results.
Keith Davis regards informal organisation as the network of personal and social relationships which is not established or required by formal organisation.
(a) Features:

Develops spontaneously and is not established for any purpose.
These represent the human psychology to socialise in the organisation.
It is pervasive.
It cannot altogether be abolished.
The authority flows upward and horizontally.
Informal authority is earned and not delegated.

(b) Functions of Informal Groups:

Provide social satisfaction and maintain cultured values and lifestyle.
The group develops system of communication to meet wants.
Exercise of social controls which influence and regulate the behaviour of others.

Encourages managers plan and act more carefully.
It helps to get the work done.
Tends to encourage co-operation.
Gives satisfaction and stability to workgroups.
Lightens workload of a manager.
Provides useful channel for communication.
Provides a safety valve for employee’s emotions.

(d) Limitations:

Resistance to Change: The group members are strongly bound by their preconceived ideas, notions and culture.
Rumour: Such a type of organisational structure results into rumours and gossips.
Role Conflict: Workers may want to achieve the requirement of their group which might be in conflict with that of their senior.
Conformity: Social control of Informal groups exerts pressure for conformity.

(e) Control of informal Organisation:
The significant aspects of manager’s duty in this connection are-

He should recognise and reconcile himself to the existence of informal organisation.
He should have a positive role and should minimise the negative aspects.
Formal organisation should be turned with informal organisation which can contribute to the accomplishment of enterprise objective.
He should make informal organisation secondary to formal organisation.

8. Structure of Organisation:

The structure of organisation is created to achieve certain goals.
There should be a proper authority-responsibility relationship. It is means to an end.
The structure manifests the enterprise objectives.
It should not be a static structure but should be dynamic.
It should be able to adapt and grow with the changing business conditions.
To adapt itself to the changes an organisation may have to modify a part of its working,
Peter F. Drucker also views organisations as a mean to the end.

Purpose And Cause Of Organizing:

Purpose – to facilitate achievement of enterprise objective through orderly organised group effort with least cost, time, money, effort and pain.
Cause of organisation lies in the limitations of span of management.

Dynamic Organisation Structure:
Call for adopting the organisations structure to changing conditions so that it can survive & grow.

Developing an Organisation Structure it calls for the following steps:

Clear definition of objectives: This will help in determination of stability and basic characteristics of the organisation.
identifying the activities and grouping them Into one group for easy coordination of group activities: Enumeration of activities is necessary to achieve the objectives.
Determine the structure: The organiser must decide about the basis of department, orientation, number of departments, pattern of authority. etc.
Revise the structure on the basis of assessment of resources: This calls for determining the human and financial resources In order to match the different positions in the organisation along with the resources.

Growth in Organisation:
According to Larry E. Greiner, Each evolutionary period is characterised by the dominant management style used to achieve growth, while each revolutionary period is characterised by the dominant management problem that must be solved before growth will continue.

The movement of enterprise, in general, appears to be towards autonomy, flexibility and informality and is conducive to adaptiveness and innovativeness that are key to organisational effectiveness & success.

Nature of Management and its Process MCQ Questions

1. When one team member influences the other team members for greater performance than what it was before such motivation, this effect is called ……………
(a) Growth
(b) Enrichment
(c) Synergy effect
(d) Adaptation
Answer:
(c) Synergy effect.

2. structure is the oldest pattern of organisation.
(a) Line structure
(b) Functional organisation
(c) Matrix structure
(d) Line and staff organisation.
Answer:
(a) Line structure.

3. structure is also called military/scalar type of organisation.
(a) Functional organisation
(b) Matrix organisation
(c) Project management organisation.
(d) Line organisation
Answer:
(d) Line organisation

4. Line organisation is flexible and changeable.
(a) True
(b) False
(c) Partly True/Partly False
(d) None of the above.
Answer:
(b) False

5. Under which system, the whole task of management and direction of subordinates is divided according to the type of work involved.
(a) Line organisation
(b) Functional organisation
(c) Line and staff
(d) Matrix organisation
Answer:
(b) Functional organisation.

6. Functional organisation is characterised by total absence of stall specialists.
(a) True
(b) Partly True/Partly False
(c) False
(d) None of the above.
Answer:
(c) False.

7. Under ……………… organisation, there is a clear demarcation between thinking and doing.
(a) Line and staff organisation
(b) Functional organisation
(c) Matrix organisation
(d) Project management organisation.
Answer:
(a) Line and staff organisation.

8. ……………….. develops spontaneously and is not established by formal managers.
(a) Formal organisation
(b) Authority
(c) Informal organisation
(d) Power.
Answer:
(c) Informal organisation.

9. A manager in an organisation is judged by the work he performs on his own. Hence, delegation is not essential for him.
(a) False
(b) True
(c) Partly True/Partly False
(d) None of the above.
Answer:
(a) False

10. …………………. is described as the right of a manager to command subordinates, issue them orders and instructions.
(a) Responsibility
(b) Accountability
(c) Delegation
(d) Authority
Answer:
(d) Authority.

11. Authority flows downwards and …………… flows upwards.
(a) Control
(b) Responsibility
(c) Accountability
(d) None of the above.
Answer:
(b) Responsibility.

12. Authority can be delegated whereas responsibility cannot be delegated.
(a) True
(b) False
(C) Partly True Partly False
(d) None of the above.
Answer:
(a) True.

13. ………………. will be more effective when subordinates receives orders and instructions directly from one senior only.
(a) Delegation
(b) Decentralisation
(c) Accountability
(d) Planning.
Answer:
(a) Delegation.

14. …………………………………. is not compulsory to the process of organisation.
(a) Planning
(b) Controlling
(c) Decentralisation
(d) Delegation
Answer:
(c) Decentralisation.

15. In Decentralisation, management exercises maximum control.
(a) False
(b) True
(c) Partly True/Partly False
(d) None of the above.
Answer:
(a) False.

16. Decentralisation is a step towards creation of …………….. units.
(a) Complete
(b) Autonomous
(c) Semi-autonomous
(d) None of the above.
Answer:
(c) Semi-autonomous.

17. In delegation control rests with the ………………….. .
(a) Concerned department
(b) Delegator/supervisor
(c) Subordinate
(d) None of the above
Answer:
(b) Delegator/supervisor.

18. Space of matrix organisation, the manufacturing department constitutes the horizontal chain of command.
(a) True
(b) False
(c) Partly True/Partly False
(d) None of the above.
Answer:
(b) False.

19. ………………………. helps to eliminate overlapping or duplicate activities and thus effects cost savings.
(a) Delegation
(b) Decentralisation
(c) Informal organisation
(d) Centralisation
Answer:
(d) Centralisation.

20. Functional organisation is difficult to establish because of high degree of control
(a) true
(b) False
(c )True/Partly False
(d) None of the above.
Answer:
(a) true.

21. Which one is not a feature of Organisation
(a) Allotment of duties
(b) Goal-Oriented
(c) Group effort
(d) Division of work
Answer:
(a) Allotment of duties.

22. Which one is the importance of Organisation
(a) Facilitates Administration
(b) Integration of Activities
(c) Developing Relationships
(d) Allotment of duties
Answer:
(a) Facilitates Administration.

23. There are ……………. types of Organisation Structure
(a) Five
(b) Two
(c) Three
(d) Four
Answer:
(b) Two.

24. ………………………… in a formal sense refers to a collectivity of persons engaged in pursuing specified objectives.
(a) Organisation
(b) Teamwork
(c) Both (a) & (b)
(d) None of the above
Answer:
(a) Organisation.

25. Which structure refers to the job and position of an organisation?
(a) Formal Organisation
(b) Informal Organisation
(c) Both (a) and (b)
(d) None of the above
Answer:
(a) Formal Organisation.

26. Line Organisation is the part of a ……………………. .
(a) Functional Organisation
(b) Informal Organisation
(c) Both (a) and (b)
(d) None of the above
Answer:
(c) Both (a) and (b)

27. Which of the following are the barriers to delegation?
(a) Lack of ability to direct well
(b) Fear of loss of power.
(c) Both (a) and (b)
(d) None of the above
Answer:
(c) Both (a) and (b)

28. To complete the process employees must also be assigned accountability.
(a) Decentralisation
(b) Centralisation
(c) Delegation
(d) Controlling
Answer:
(c) Delegation.

29. Which one is not the principle of delegation?
(a) Allocation of Duties
(b) Clarity of Delegation
(c) Parity of Authority
(d) None of the above.
Answer:
(a) Allocation of Duties.

30. Which function have direct responsibility for the objective of enterprise?
(a) Project Management Organisation
(b) Line and Staff Management
(c) Line Organisation
(d) Matrix Organisation.
Answer:
(c) Line Organisation.

31. …………………….. refers to the tendency to withhold a larger part of formal authority at higher position in management.
(a) Centralisation
(b) Delegation
(c) Both (a) and (b)
(d) None of the above.
Answer:
(a) Centralisation.

32. Democratisation of management is yet another advantage of ……………………….. .
(a) Centralisation
(b) Decentralisation
(c) Planning
(d) Controlling
Answer:
(b) Decentralisation.

33. Delegation is must for ………………………… .
(a) Centralisation
(b) Decentralisation
(c) Organisation
(d) Controlling
Answer:
(b) Decentralisation.

34. Which functions as comprising human relationships in group activity.
(a) Planning
(b) Controlling
(c) Organisation
(d) Directing
Answer:
(c) Organisation.

35. “Delegation of authority and placing of responsibility to the executives of the department for carrying out the assigned activities” is an important step of-
(a) Planning
(b) Organising
(c) Directing
(d) Controlling.
Answer:
(b) Organising.

36. …………………… can be defined as collection of people and coordination of their activities of the enterprise.
(a) Directing
(b) Controlling
(c) Organising
(d) Planning
Answer:
(c) Organising.

37. Organisation is based on the principle of ………………….. .
(a) Decision Making
(b) Division of Work
(c) Developing Relationships
(d) Group Efforts
Answer:
(b) Division of Work.

38. …………………………….. means a large part of decision-making and authority is withhold at higher positions in the management hierarchy.
(a) Decentralisation
(b) Centralisation
(c) Delegation
(d) Both (a) and (b)
Answer:
(b) Centralisation.

39. The organisation can sustain without but not without …………………… .
(a) Centralisation, Decentralisation
(b) Delegation, Authority.
(c) Centralisation, Decision-making.
(d) Decentralisation, Delegation
Answer:
(d) Decentralisation, Delegation.

40. Which of the following is not a factor determining degree of Decentralisation?
(a) Control Techniques
(b) Size of the Enterprises
(c) Management Attitude
(d) Allotment of Duties
Answer:
(d) Allotment of Duties.

41. ………………………… regards informal organisation as the network of personal and social relationships which is not established or required by formal organisation.
(a) Keith Davis
(b) Barnard
(c) Kasts and Rosenzweing
(d) Larry E. Greiner
Answer:
(a) Keith Davis.

42. “The right to give orders and exact obedience” is ……………………. .
(a) Authority
(b) Responsibility
(c) Accountability
(d) Authority – Power Continuum
Answer:
(a) Authority.

43. Which one of the following is a feature of delegation of authority?
(a) Division of work and delegation of authority.
(b) The tendency to withhold a larger part of the formal authority at higher echelons of management hierarchy.
(c) Combining functional departments with product or project organisation.
(d) A dear demarcation between thinking and doing.
Answer:
(a) As the organisation grows, there is a need to delegate authority to more and more people to cope with the volume of work. Delegation of authority entails division of workload and sharing responsibility.

44. “The multiplicity of vertical and horizontal relationships impair organisational efficiency”. This statement is for:-
(a) Functional organisation
(b) Line organisation
(c) Matrix organisation
(d) None.
Answer:
(c) In matrix organisation, the multiplicity of vertical and horizontal relationships impair organisational efficiency. Project wise, the organisation is divided into various functional departments, which form the vertical chain of command and the project organisation or product decisions from the horizontal chain of command. The vertical lines of authority are cut horizontally across by project on product line divisions.

45. Which one of the following forms of organisation is suitable for software development for a client?
(a) Line Organisation
(b) Functional Organisation
(c) Line and Staff Organisation
(d) Project Management Organisation.
Answer:
(d) Project organisation is a setup within an existing organisation for the purpose of completion of project or accomplishing assigned objectives in time and within cost and profit goals as laid down by the management in this connection. It may involve development and introduction of a new product, complete re-designing of an existing product line, installing a new plant, and the like. For example, Software development for a client.

46. Which one of the following is a step towards formation of semi-autonomous units?
(a) Delegation
(b) Decentralisation
(c) Centralisation
(d) Growth.
Answer:
(b) Decentralisation improves morale of personnel. Managers at different levels and semi-autonomous divisions are able to see by themselves the results of their own actions and ascertain their role and success.

47. Which one of the following statements explains the term ‘decentralisation’?
(a) The tendency to withhold larger part of formal authority at higher echelons of management hierarchy
(b) When a larger part of the authority is delegated down the levels of management so that decisions are made as near the source of information and action is possible.
(c) The concern for the people employed in an organisation
(d) None of the above.
Answer:
(b) When a larger part of authority is delegated down the levels of management so that decisions are made as near the source of information and action as possible, such a tendency and characteristic in the organisation is described as decentralisation.

48. Under …………………… organization, there is a clear demarcation between thinking and doing.
(a) Line and staff
(b) Functional
(c) Matrix
(d) Project management.
Answer:
(a) Underline and staff organisation, there is a clear demarcation between thinking and doing because the staff being the “thinker” and the line being the “doers” describes the line and staff organisation.

49. An efficient system of control encourages top management to go in for of authority.
(a) Centralisation
(b) Decentralisation
(c) Classification
(d) None of the above.
Answer:
(a) Centralisation refers to the tendency to withhold a larger part of formal authority at higher part of formal authority at higher echelons of management hierarchy. Thus, larger number of decisions and more important of them are made by those occupying higher positions in the organisations. So, by this, we can say that “An efficient system of control encourages top management to go in for centralisation of authority.”

50. organisation refers to the relationship between people based not on procedures but on personal attitudes prejudices and also the likes and dislikes of people.
(a) Informal
(b) Formal
(c) Normal
(d) Mutual.
Answer:
(c) Accountability denotes answerability for the accomplishment of the task assigned by the superior to his subordinate. It is to be noted that the process of delegation is not at all complete with just assigning the duty and delegating appropriate authority for the accomplishment of the task. The process of delegation becomes complete only by making the delegates answerable to the superior for his functioning.

51. denotes answerability for the accomplishment of the task assigned by the superior to his subordinate.
(a) Delegation of power
(b) Authority
(c) Accountability
(d) Centralisation.
Answer:
(a) Informal organisation refers to the relationship between people based not on procedures but on personal attitudes, prejudices and also the likes and dislikes of people. It is a network of personal and social relationships which is not established.

52. Line type of structure is the pattern of organisation.
(a) Modern
(b) Oldest
(c) Most expensive
(d) Flexible.
Answer:
(b) The oldest and simplest form of organisation is line organisation. Line functions are those which have direct responsibility for accomplishing the objective of the enterprise.

53. Henry Fayol defined ……………………… as “the right to give orders and exact obedience”.
(a) Delegation
(b) Authority
(c) Accountability
(d) Reporting.
Answer:
(b) Authority may be described as the right of a manager to command subordinates, issue them orders and instructions and enact obedience. Fayol defined authority as “the right to give orders and exact obedience.”

54. Delegation is the process while ………………. is the situation produced by larger delegation of authority down the levels of organisation.
(a) Centralisation
(b) Accountability
(c) Decentralisation
(d) Responsibility.
Answer:
(c) Decentralisation is basically concerned with attitude and philosophy of the organisation and management. It is not merely a process involving handing over part of the authority to the subordinates. Delegation is a process while decentralisation is the situation produced by larger delegation of authority down the levels of organisation.

55. Small scale industry consists of which type of organisation?
(a) Functional organisation
(b) Line organisation
(c) Matrix organisation
(d) Project organisation
Answer:
(b) Small Scale Industry consist of Line Organisation because it is an oldest form of organisation and requires at all levels of management.

56. Delegation is a …………………………… and decentralisation is a produced by larger delegation of authority down the levels of organisation –
(a) Situation, process
(b) Distribution, process
(c) Process, situation
(d) None of the above.
Answer:
(c) Decentralisation is basically concerned with attitude and philosophy of the organisation and management. It is not merely a process involving handling one or part of the authority to the subordinates. Delegation is a process while decentralisation is the situation produced by larger delegation of authority down the level of organisation.

57. Which of the following is the oldest & simplest form of organisation?
(a) Line organisation
(b) Matrix organisation
(c) Functional organisation
(d) Line and staff organisation.
Answer:
(a) The oldest and simplest form of organisation is line organisation. Line functions are those which have direct responsibility for accomplishing the objective of the enterprise.

58. Vertical line of authority are cut horizontally across by …………… .
(a) Product line division
(b) Project line division
(c) Product or project line division
(d) None of these
Answer:
(c) In a matrix organisation, the functional departments like manufacturing, marketing, accounting and personnel constitute the vertical chains of command while the project organisation or product divisions form the horizontal chains of command. The vertical lines of authority are cut horizontally across by project or product line divisions.

59. Which one out of the following is the most recent organisation structure?
(a) Matrix organisation
(b) Line organisation
(c) Project management organisation
(d) Functional organisation.
Answer:
(a) A newly evolving organisation structure which has received considerable attention in the West is the Matrix Organisation. It combines functional departmentation with product or project organisation.

60. A traditional “top-down” organisation is ………………….. organisation.
(a) An absolutely formalised.
(b) A largely decentralised
(c) A largely centralised.
(d) An absolutely decentralised.
Answer:
(b) Large part of authority is delegated down the levels of management, so that decisions are made as near the source of information and action as possible, such as tendency and characteristics in the organisation is described as decentralization. Hence, option (b) is correct answer.

61. The formal right of the manager to take decisions give orders and expect the orders to be carried out is:
(a) Unity of Command
(b) Accountability
(c) Authority ‘
(d) Responsibility.
Answer:
(c) “Authority” may be described as right of a manager to command subordinates, issue them orders and instructions and exact obedience. Hence, option (c) is correct answer.

62. Organisational design requires a manager to ………………… .
(a) Organise groups within an organisation
(b) Change the culture of an organisation
(c) Change the logo of an organisation
(d) Change or develop the structure of an organisation.
Answer:
(d) Organisational design is a step by step methodology which identifies the dysfunctional aspect of workflow, procedures and structure etc. to change or develop the structure of an organisation. Hence, option (d) is correct.

63. Which of the following refers to a Scalar Chain?
(a) Thinking out and executing a plan
(b) Equity and equality of treatment while dealing with people
(c) Minimising employee turnover
(d) Superior- subordinate relations throughout the organisation.
Answer:
(d) In this form of organisation, a supervisor exercises direct supervision over a subordinate under the organisation, authority flows from the person at the top to the person at the lowest of the organisation. This form of organisation is called military organisation or scalar chain type of organisation.

64.“The right to take decisions by virtue of your formal position” can be termed as:
(a) Direction
(b) Responsibility
(c) Accountability
(d) Authority.
Answer:
(d) Authority may be regarded in the official hierarchical sense as the right to command and power may be regarded as the capacity to influence the behaviour of others.

65. The traditional view holds that managers should not directly supervise more than subordinates.
(a) Seven or eight
(b) Nine or ten
(c) Five or six
(d) Eleven or twelve.
Answer:
(c) The traditional view holds that managers should not directly supervise more than six subordinates.

66. Which kind of organisation structure is recommended in the case, where the scale of business is small, number of subordinate and operative employees are not many and the organisation is in continuous process industry?
(a) Line organisation
(b) Line & staff organisation
(c) Matrix organisation
(d) Functional organisation.
Answer:
(a) The line organisation system can be successfully utilised: Where the scale of organisation is small, number of subordinates and operative employees are not too many In continuous process industry.

67. Of the functions of management, the purpose of …………….. is to assemble similar-looking jobs so as to bring order in the organisation,
(a) Directing
(b) Auditing
(c) Feedback
(d) Organising.
Answer:
(d) Organising is the function of management which purposes to assemble similar-looking jobs so as to bring order in the organisation.

68. Identify the right sequence of the process of organizing:
(i) Identification and classification of activities
(ii) Grouping activities
(iii) Establishing superior-subordinate relationship
(iv) Delegation of authority
(a) (i), (ii), (iii), (iv)
(b) (i), (Ii), (iv), (iii)
(c) (ii), (iii), (iv). (i)
(d) (ii), (i), (iii), (iv)
Answer:
(b) Process of organisation:

Determination of objectives and classification of activities.
Grouping the activities.
Allotment of Duties.
Developing Relationships.
Integration of activities.

Thus, option (b) is correct.

69. It arises out of the network of personal and social relationships which is not established as required by formal organisation:
(a) Informal structures
(b) Formal structures
(c) Both (a) and (b)
(d) None of the above
Answer:
(a) Informal organisation structure refers to the relationship between people that is not based on procedures but on personal attitudes, prejudices, likes and dislikes. It arises out of the network of personal and social relationships which is not established as required by formal organisation.

70. Which of the following form of organisation structure is the most suitable for software development for a client?
(a) Line and staff organisation
(b) Line organisation
(c) Functional organisation
(d) Project management organisation.
Answer:
(d) Project management organisation is the most suitable for software development for a client as it may involve development and introduction of a new product, complete redesigning of an existing product line as the lie.

71. Which of the following is not a feature of organising?
(a) It is a subprocess of management
(b) It established authority-responsibility relationships
(c) It deals with individual effort.
(d) It is based on the principle of division of work.
Answer:
(c) Individual effort is not a feature of organising as it is described as a collective group of persons engaged in pursuing specified objectives. It can be considered as consisting of division of work and coordination of their activities towards some common objectives.

72. Larger organizations tend to have ………………….. than smaller organizations.
(a) More specialization
(b) Less departmentalization
(c) Fewer rules and regulations
(d) Less employees.
Answer:
(a) Larger organisations tend to have more specialization than smaller organisations as these organisations have more control and coordination which makes it as such.

73. The formal right of a manager to make decisions, give orders, and expect the order to be carried out is:
(a) Unity of command
(b) Accountability
(c) Authority
(d) Responsibility.
Answer:
(c) Authority may be described as the right of a manager to command subordinates, issue the orders and instructions and to act or not to act depends upon how he deems fit to accomplish certain objectives of the organisation.

74. The jobs of assembly line employees are to be changed to allow more tasks to be done by individual workers. This is a reduction in ………………. .
(a) Centralisation
(b) Departmentalisation
(c) Work specialisation
(d) Chain of Command
Answer:
(a) Centralisation refers to the tendency to withhold a larger part of formal authority at higher echelons of management hierarchy. Thus more important decisions are made by those occupying higher positions.

75. In a ………………. employees are recruited from functional departments to work on a specific project for a limited time period.
(a) Matrix structure
(b) Divisional structure
(c) Team structure
(d) Productive structure.
Answer:
(a) In a Matrix Organisation, the functional department like manufacturing, marketing, accounting constitute the vertical chains of command, while the project organisation form the horizontal chain of command. This kind of organisation consists of a group of individuals drawn from the various functional departments, who are assigned to a particular project.

76. ………………………………. is the process of assessing an organisation’s strategy and environmental demands and then determining the appropriate organisational structure.
(a) Organisational structuring
(b) Organisational design
(c) Organisational chartering
(d) Organisation development.
Answer:
(a) Organisational structuring is the process of assessing an organisation strategy and environmental demands and then determining the appropriate organisational structure.

77. Which of the following statements about delegation can be best applied?
(a) Delegation is synonymous with participation
(b) The group shares decision-making authority & responsibility with management
(c) When a manager delegates decision-making authority, the subordinate makes a recommendation and then the manager makes the final decision
(d) Managers delegates so that subordinates takes the decision and he can spend more time on relatively important decisions.
Answer:
(d) Delegation is an administrative process of getting things done by others by giving them responsibility. It entails the division of work load and the sharing of responsibility. By delegating some of the work-load towards subordinates, the manager may focus and spend more time on relatively important decisions.

78. The task of ‘organising’ involves:
(a) Assigning tasks
(b) Grouping tasks into departments
(c) Defining yOais
(d) Exercising authority.
Answer:
(b) Organising is concerned with both the “orderly” assemblage of human and material resources as well as the process of development of a structure of formally identified and distinguished tasks, roles and relationships that are attributable to the various members so that they can work effectively as a group. Thus, the division of work among people and coordination of their efforts to achieve specific objectives are the fundamental aspects of organization.

79. ……………….. companies can easily coordinate activities in a consistent way across diverse departments.
(a) Big
(b) Decentralised
(c) Centralised
(d) Multinational.
Answer:
(c) Centralisation refers to the tendency to withhold a larger part of formal authority at higher echelons of management hierarchy. Thus, larger number of decisions more important to them are made by those occupying higher positions in the organisation. Thus, option c is correct.

80. Which of the following is not a characteristic of line organisation?
(a) They are like military organisation
(b) They are simple to work in
(c) They are flexible
(d) They are stable.
Answer:
(c) The oldest and simplest form of organization is line origination. Line functions refer to those employees who have direct responsibility for accomplishing the objective of the enterprise. This form of organisation is otherwise called military organization or scalar type of organisation. It is stable in character but apart from bulk of advantages, it is rigid and inflexible. Discipline is maintained to the extent that organisation is rarely allowed to change.

81. Which is the first step in effective delegation:
(a) Fixed the employees responsibility for the work they are assigned.
(b) Set up a feedback mechanism.
(c) Match the desired task with the most appropriate employee.
(d) Determine clearly the task you wanted to be done and the people who are available.
Answer:
(d) Irrespective of the level at which authority is passed on to subordinates, the delegation of authority can be conceived as a four-step process. The first step for the effective delegation is the Allocation of Duties. Duties are the tasks and activities that a superior desires someone else to do. So, before authority can be delegated, the duties over which the authority relates must be allocated to subordinate. Thus, option d is correct.

82. Organizational design requires a manager to …………… .
(a) Change the culture of an organization
(b) Change the logo of an organization
(c) Change or develop the structure of an organization
(d) Organize groups within an organization.
Answer:
(c) Organisational Design is a step by step methodology which identifies the dysfunctional aspect of workflow, procedures and structures etc. To change or develop the structure of an organisation.

83. The sets of assembly line employees are to be changed to allow more tasks to be done by individual workers. This is a reduction in ………………….. .
(a) Centralisation
(b) Work specialisation
(c) Departmentalisation
(d) Chain of command
Answer:
(a) Decentralisation allows more work to be done at lower lever by fixing responsibility at different level. Decentralisation is reduction in Centralisation.

84. Delegation of Authority results into:
(a) Obligation
(b) Decentralisation
(c) Responsibility
(d) Centralisation
Answer:
(b) Delegation of Authority results in Decentralisation. Decentralisation is an extended form of Delegation.

85. Mathematical approach to management is closely related to:
(a) Empirical approach of management
(b) Interpersonal behaviour approach of management
(c) Corporate approach of management
(d) Decision theory approach of management.
Answer:
(d) Decision theory approach can be defined as a course of action purposely chosen from a set of alternatives (using logical views as well as social views) to achieve organisational or managerial objectives or goals. Option (d) is correct answer.

86. Under ………………… organization, there is a clear demarcation between thinking and doing:
(a) Line and Staff
(b) Functional
(c) Matrix
(d) Project management
Answer:
(a) Line and Staff Organisation is a type of organisation in which there is clear demarcation between thinking and doing. In this Organisation, the Staff being ‘thinkers’ and line being ‘doers’.

87. Performance appraisal means systematic process of measuring and evaluation of …………….. of each employee by a person trained for merit rating.
(a) Personality/Performance
(b) Intelligence
(c) Mental health/Vigour
(d) Participation
Answer:
(a) Performance appraisal means systematic process of Measuring and Evaluation of personality/performance of each employee by a person trained for Merit Rating.

88. Most Companies begin the process of establishing organisational ethics programs by developing:
(a) Ethics training programmes
(b) Codes of conduct
(c) Ethics enforcement mechanisms
(d) Hidden agendas
Answer:
(b) Codes of Conduct is a formal statement followed by most of companies begin the process of establishing organisational ethics programmes.

89. A company engaged in alcohol manufacturing merged with a cigarette manufacturing Firm. What type of merger at this?
(a) Horizontal merger
(b) Product extension merger
(c) Market extension merger
(d) Vertical merger.
Answer:
(b) Cigarette and Alcohol are two different product under category of narcotic as a product extension merger takes place between two business organisations that deals in products that are related to each other and operate in the same market. Thus option (b) is correct answer.

90. Decentralisation means:
(a) Large part of authority is withhold at higher levels
(b) Large part of authority is delegated to lower levels
(c) Both (a) and (b)
(d) None of these.
Answer:
(b) Decentralisation refers to delegation of large part of auth jrity to lower levels.

91. Centralisation and Decentralisation are one and the same things
(a) True
(b) False
(c) Partly true
(d) Partly false.
Answer:
(b) Decentralisation and Centralisation are to different concepts that are contrary to each other.

92. Which is suitable form of organisation for small organisations?
(a) Matrix
(b) Line and Staff
(c) Product Management
(d) Line
Answer:
(d) For small size organisation line organisation structure is most suitable as it is fully centralised structure, helps in easy control.

93. Tradition ‘Top-down’ organisations are:
(a) Largely Centralised
(b) Largely Decentralised
(c) Authoritively Centralised
(d) Authoritively Decentralised
Answer:
(a) Tradition ‘Top down’ organisations are largely centralised as in such organisation decision are taken by top-level and executed by lower level of hierarchy.

94. Military Organisation is also known as:
(a) Project Management Organisation
(b) Matrix Organisation
(c) Line and Staff Organisation
(d) Line Organisation.
Answer:
(d) Line organisation is also called Military organisation or scalar type of organisation; in this form of organisation, a supervisor exercises direct supervision over a subordinate.

95. Matrix organisation is the combination of:
(a) Functional departmentation with product organisation
(b) Functional departmentation with labour heads
(c) Either (a) or (b)
(d) Neither (a) nor (b)
Answer:
(a) Matrix organisation is a combination of functional departmentation (manufacturing, marketing, accounting, etc.) with Project Organisation (or product divisions form the horizontal chain of command).

96. Delegation of authority is as same as accountability.
(a) True
(b) False
(c) Partly True
(d) Partly False
Answer:
(b) Delegation is related to authority, where accountability is related to responsibility.

97. …………………. Organisation refers to the relationship between people based not on procedures but on personal attitudes, prejudices and also the likes and dislikes of people
(a) Informal
(b) Formal
(c) Normal
(d) Mutual
Answer:
(a) ‘Informal Organisation’ refers to the relationship between people based not on procedures but on personal attitudes, prejudices and also likes and dislikes of people.

98. …………………………. denotes answerability for the accomplishment of the task assigned by the superior to his subordinate.
(a) Delegation of power
(b) Authority
(c) Accountability
(d) Centralisation
Answer:
(c) ‘Accountability’ denotes answerability for the accomplishment of the task assigned by the superior to his subordinate.

99. Line type of structure is the ……………….. pattern of organisation.
(a) Modern
(b) Oldest
(c) Most expensive
(d) Flexible.
Answer:
(b) Line type of structure is the ‘oldest’ pattern of organisation. It refers to the structure based on scalar chain and formal organisation structure.

100. Henry Fayol defined ……………………. as “the right to give orders and exact obedience”.
(a) Delegation
(b) Authority
(c) Accountability
(d) Reporting
Answer:
(b) Henry Fayol defined ‘Authority’ as the “right to give orders and exact obedience”.

101. Delegation is the process while is the situation produced by larger delegation of authority down the levels of organisation.
(a) Centralisation
(b) Accountability
(c) Decentralisation
(d) Responsibility
Answer:
(c) Delegation is the process while ‘Decentralisation’ is the situation produced by larger delegation of authority down the levels of organisation.

102. Grapevine consists of a complex network of ……………. communication.
(a) Crosswise
(b) Formal
(c) Informal
(d) None of the above
Answer:
(c) Grapevine consists of a complex network of ‘Informal communication’.

103. An efficient system of control encourage top management to go in for ……………….. of authority.
(a) Centralisation
(b) Decentralisation
(c) Classification
(d) None of the above.
Answer:
(b) An efficient system of control encourage top management to go in for ‘decentralisation’ of authority.

104. Which of the following is not the characteristic of organizing.
(a) It is sub-process of management
(b) It includes individual efforts
(c) It based on division of work
(d) It establishes a superior or subordinate relationship.
Answer:
(b) Characteristics of organisation are –

It is a subprocess of management
It is goal oriented
It deals with group efforts
It is based on the principle of ‘division of work’
It establishes authority coordination between them and establishment of definite lines of supervision.

105. ……………….. refers to the tendency to withhold a large part of formal authority at higher echelons of management
(a) Centralisation
(b) Decentralisation
(c) Both (a) and (b)
(d) None.
Answer:
(a) Centralisation refers to the tendency to withhold a larger part of formal authority at higher echelons of management hierarchy. Thus, large number of decisions more important to them are made by those occupying higher positions in the organisation.

106. Controlling the authority at higher echelons
(a) Centralisation
(b) Decentralisation
(c) Both
(d) None
Answer:
(a) Centralisation refers to the tendency to withhold a larger part of formal authority at higher echelons of management hierarchy, whereas decentralisation is to distribute the authority to the lower level of management.

107. If the management gives decision making power to his team members then he is doing?
(a) Centralisation
(b) Decentralisation
(c) Both
(d) None
Answer:
(b) The process of delegating large part of authority down the level of management so that decision are made as near the source of information and action as possible, such a tendency and characteristic in the organisation is described as decentralisation.

Organisation – Business Management Ethics and Entrepreneurship Notes

Organisation – Business Management Ethics and Entrepreneurship Notes

CS Foundation Business Management Ethics and Entrepreneurship Notes